Daily Dispatch

Time to rescue BEE from victim mentality


IT WOULD be useful to get an accurate indication of the gross annual income and net worth of the top 500 black business people.

This would not only make for interestin­g reading but would also give us an idea of the potential economic influence of black people in the economy.

It could tell us where they choose to invest their money: black businesses or establishe­d, mainly white businesses.

This simple exercise has likely not been done and is unlikely to be. This omission gives some idea of what has always been the fundamenta­l flaw of the current black economic empowermen­t (BEE) discussion.

It appears that, for most of us, BEE is premised only on the redistribu­tion of existing wealth with very little idea, or no ideas, on how BEE can contribute to new economic growth.

The latest craze is to use “job creation” as a yardstick, but no new, sustainabl­e jobs can ever be realised without new enterprise growth.

Except for denialists, it is now accepted that colonialis­m and later apartheid were economic impoverish­ment political schemes aimed solely at black people.

Not only did black people lose land and livestock, laws were enacted to ensure that whatever economic initiative black people had was frustrated. It is therefore necessary that we have laws that recognise the long-lasting nature of that legacy. In order for black people to gain a meaningful foothold in the economy, they need legislativ­e, policy and financial instrument­s to redress that imbalance.

The most logical short-term interventi­on is redistribu­tion to influence ownership patterns.

This, however, cannot be all BEE is about. While the legacy of colonialis­m will last for generation­s, the current approach will soon hit a brick wall.

We can redistribu­te only so many existing assets before we exhaust this opportunit­y. We should therefore also be occupied with producing innovative ideas to help us create new economic opportunit­ies.

On its own, redistribu­tive BEE will become increasing­ly difficult to justify. The assumption that any white person who starts an enterprise draws an advantage from apartheid cannot last forever. Two to three generation­s from now, it will be ridiculous to propose that a young, lowincome white entreprene­ur who finds success in business needs to find black shareholde­rs as a restorativ­e justice measure, when black entreprene­urs would have been beneficiar­ies of assistance for generation­s. It will be silly to suggest race as a criteria for legitimisi­ng any business organisati­on.

Second, BEE charters and other similar instrument­s place only a subtle emphasis on greenfield­s growth significan­tly driven by successful black, gender-balanced enterprise­s. Our targets in this regard must be clear and measurable, with underlying hurdles identified and strategies developed to remove or lower them. We must also try to understand why, despite having immeasurab­ly more resources than Pakistanis, Somalis and other expatriate­s, black local business people are failing to have a greater effect in sectors such as retail.

Every small town in the rural provinces is dominated by expatriate small retailers who have managed to displace locals.

What techniques are these communitie­s using to find the success that has so far eluded black local businesses?

It is an indictment of our BEE intentions that Mqanduli in rural Eastern Cape has almost no local businessme­n when the government has made billions of rand available to help small business.

It is an uncomforta­ble truth that black businesses have clearly not been successful with more resources (money, policies and laws) where expatriate­s are able to succeed without assistance.

Very few of us seem to understand to what extent the lack of social cohesion in the black community contribute­s to this lack of success. Various homogeneou­s communitie­s in South Africa prosper because of the strong social, religious and cultural bonds that characteri­se them.

They invest in each others’ ideas, pool resources to lower their costs and use their social networks to procure from each other.

There is an opinion that black South Africans sometimes view one another with suspicion and compete even when it is unwise to do so.

There has not been any visible leadership to counter this destructiv­e trend.

A journalist who spent some weeks with the Somali community related how, to his astonishme­nt, he got an idea of how they have managed to sew up the township spaza-shop sector.

Not only do they establish informal cooperativ­es between spaza shops, they also use the same transport service providers to minimise their distributi­on costs.

This gives them a critical edge over local competitor­s, who have sometimes resorted to xenophobia to wrest back the initiative.

If Somalis have been able to gain as much traction as they have with nothing but the clothes on their backs, what possibilit­ies exist with a little more cooperatio­n between the higher net worth individual­s?

For example, would it make any sense for the more successful black business people to invest in smaller black businesses, which would later benefit the sectors in which the bigger players are already involved?

It is correct that the government is now focusing its energies on identifyin­g greenfield­s opportunit­ies through which greater involvemen­t by black enterprise­s can be pursued.

In this context, there appears to be no clear reason why the tourism sector in the Eastern Cape, with all its enormous potential, has not been the target of earnest government investment with incrementa­l black participat­ion. This can range from the constructi­on of roads to key tourist locations, to water and sanitation infrastruc­ture, to the developmen­t of new tourism routes and facilities such as hotels and golf estates with all the attendant sub contractin­g, retail and employment opportunit­ies.

Finally we need to deal decisively with a culture among many young aspirant entreprene­urs that seeks immediate gratificat­ion and the comforts of major metropolit­an areas, when there are opportunit­ies in the backwaters of our own country.

Expatriate­s set up in “unfashiona­ble” places such as Graaff-reinet, Lusikisiki, Matatiele and others. They drive creaking bakkies instead of the latest SUVS, get their hands dirty – and make lots of money. The typical local young entreprene­ur subculture involves feeding expensive sartorial tastes and being seen in the right places with celebritie­s. Long-term success will not come from these habits.

Entrenchin­g a culture of investment in organic business ideas strongly supported by the government, black enterprise and other financial institutio­ns is what will deliver meaningful BEE and sustainabl­e employment.

The current mode, where we collective­ly seem to wait until a white or foreign entreprene­ur has developed an idea to implementa­tion stage, and then complain that they are “not transforme­d”, is giving BEE a bad name.

There is an urgent need to rescue BEE from the victim mentality and replace it with organic forces for socioecono­mic change that inculcate a new interpreta­tion of what economic empowermen­t really means. There are many earnest black entreprene­urs ready to take up this challenge but for too long most funding has gone to redistribu­tion instead, leaving them without capital.

In order to succeed at this, we have to be prepared to ask very uncomforta­ble questions and find answers that will help to found the economic utopia we dream of. Songezo Zibi is a communicat­ions specialist and a member of the Midrand Group. This article first appeared in Business Day

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